industrial and commercial policies. One might argue that the pace of the positive sectoral policies and economic
results are preferentially allocated to the sectors, industries or activities that, according to the indicator of the
domestic cost of the factors, would have comparative advantages. Also, literature reveals several opinions that,
showing the disadvantages of the domestic cost indicator of the factors, are against the policies of preferential
allocation of the resources based on estimations of the comparative advantages. A major objection refers to the fact
that the domestic cost indicator of the factors is a static measure that, therefore, ignores the dynamic character of the
comparative advantages. Secondly, one may mention the excessive sensitivity of the indicator to the calculation
assumptions and input quality. Thirdly, it demonstrates that the policies of preferential allocation of resources have
not positively contributed but, at most, insignificantly to the performance of the national economies to which they
were applied (Table 1).
Table 1 - The results of some estimations of the comparative advantages of Romania
Domestic cost of the factors
(variation range in 1990 and 1999)
Products, industries and/or economic activities
0.30 to 1
Computers and office equipment: radio and TV sets, communication equipment; tobacco
products
1 to 2.5 Food and average industry, publishing and printing houses and recordings reproduction; medical,
optical and precision instruments and equipment and clock industry: certain extraction activities;
2.5 to 7.5
Oil and natural gas extraction; textiles and textile products; textile, fur and leather garments;
leather products and footwear; wood processing; other products of non-metallic minerals; steel
structures and metal products; machinery and equipment; electric machines and appliances;
furniture and other unclassified activities;
Over 7.5
Coal mining and preparation; pulp, paper and cardboard; chemistry and synthetically and
artificial fibers; steel industry; road transportation means; other transportation means; production,
transport and distribution of electric and thermal power, gas and hot water;
Negative value added, at
international prices
Metal ore mining and preparation; oil processing, coal cooking and nuclear fuel treatment.
Source: National Commission for Statistics, 2001, Bucharest
With regard to Romania, the results of some estimation of the comparative advantages in 1990 and 1999 allow of
drawing interesting conclusions on the competitiveness of the national industry products:
The domestic cost indicators of the factors underwent signification changes in 1999 as compared with 1990.
The changes prove the dynamic character of the comparative advantages. Generally, the periods of profound
structural changes (like the transition to the market mechanisms) are accompanied by essential and, quite often,
unpredictable changes in the comparative advantages. The probability to invalidate the initial calculations by later
evolutions is, therefore, very high so that the viability of possible discretionary policies based on such calculations
cannot be but extremely doubtful;
Most of the industrial branches show indicators higher than unity and that fact proves that the inefficiency of
the consumption of capital and /or intermediary inputs hired the profitable utilization of the advantages resulted
from the low cost of labour. It means that, generally, Romania cannot rely very much on the low cost of labour. One
may anticipate that, as the consumption of capital and intermediary input diminish, the labour cost will rise, so that
the configuration of the factors determining the comparative advantages radically change;
In principle, the relevance of such analyses decisively depends on the degree of statistical aggregation per
branches. If the branch production were perfectly homogeneous, then the indicator of the factor cost would have a
maximum relevance to the respective branch. Usually, the branch production is not perfectly homogeneous and the
indicators resulted from the aggregation reflect the average of individual conditions that might significantly differ.
The presence of the comparative advantages within the vegetable production does not necessarily imply the
existence of such advantages for all products of the branch. Correspondingly, the absence of the comparative
advantages from steel industry does not prevent the existence of such advantages for some products of the respective
branch. If the analysis were performed at the product level, it would bring about similar problems relative to the
reflection of the different conditions in the enterprises manufacturing the respective product. Thus, the presence of
the syndrome of negative value added in the oil processing industry does not justify the generalization of the
industrial and commercial policies. One might argue that the pace of the positive sectoral policies and economicresults are preferentially allocated to the sectors, industries or activities that, according to the indicator of thedomestic cost of the factors, would have comparative advantages. Also, literature reveals several opinions that,showing the disadvantages of the domestic cost indicator of the factors, are against the policies of preferentialallocation of the resources based on estimations of the comparative advantages. A major objection refers to the factthat the domestic cost indicator of the factors is a static measure that, therefore, ignores the dynamic character of thecomparative advantages. Secondly, one may mention the excessive sensitivity of the indicator to the calculationassumptions and input quality. Thirdly, it demonstrates that the policies of preferential allocation of resources havenot positively contributed but, at most, insignificantly to the performance of the national economies to which theywere applied (Table 1).Table 1 - The results of some estimations of the comparative advantages of RomaniaDomestic cost of the factors(variation range in 1990 and 1999)Products, industries and/or economic activities0.30 to 1Computers and office equipment: radio and TV sets, communication equipment; tobaccoproducts1 to 2.5 Food and average industry, publishing and printing houses and recordings reproduction; medical,optical and precision instruments and equipment and clock industry: certain extraction activities;2.5 to 7.5Oil and natural gas extraction; textiles and textile products; textile, fur and leather garments;leather products and footwear; wood processing; other products of non-metallic minerals; steelstructures and metal products; machinery and equipment; electric machines and appliances;furniture and other unclassified activities;Over 7.5Coal mining and preparation; pulp, paper and cardboard; chemistry and synthetically andartificial fibers; steel industry; road transportation means; other transportation means; production,transport and distribution of electric and thermal power, gas and hot water;Negative value added, atinternational pricesMetal ore mining and preparation; oil processing, coal cooking and nuclear fuel treatment.Source: National Commission for Statistics, 2001, BucharestWith regard to Romania, the results of some estimation of the comparative advantages in 1990 and 1999 allow ofdrawing interesting conclusions on the competitiveness of the national industry products:The domestic cost indicators of the factors underwent signification changes in 1999 as compared with 1990.The changes prove the dynamic character of the comparative advantages. Generally, the periods of profoundstructural changes (like the transition to the market mechanisms) are accompanied by essential and, quite often,unpredictable changes in the comparative advantages. The probability to invalidate the initial calculations by later
evolutions is, therefore, very high so that the viability of possible discretionary policies based on such calculations
cannot be but extremely doubtful;
Most of the industrial branches show indicators higher than unity and that fact proves that the inefficiency of
the consumption of capital and /or intermediary inputs hired the profitable utilization of the advantages resulted
from the low cost of labour. It means that, generally, Romania cannot rely very much on the low cost of labour. One
may anticipate that, as the consumption of capital and intermediary input diminish, the labour cost will rise, so that
the configuration of the factors determining the comparative advantages radically change;
In principle, the relevance of such analyses decisively depends on the degree of statistical aggregation per
branches. If the branch production were perfectly homogeneous, then the indicator of the factor cost would have a
maximum relevance to the respective branch. Usually, the branch production is not perfectly homogeneous and the
indicators resulted from the aggregation reflect the average of individual conditions that might significantly differ.
The presence of the comparative advantages within the vegetable production does not necessarily imply the
existence of such advantages for all products of the branch. Correspondingly, the absence of the comparative
advantages from steel industry does not prevent the existence of such advantages for some products of the respective
branch. If the analysis were performed at the product level, it would bring about similar problems relative to the
reflection of the different conditions in the enterprises manufacturing the respective product. Thus, the presence of
the syndrome of negative value added in the oil processing industry does not justify the generalization of the
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